Singapore Air climbs out of depression

SINGAPORE Airlines (SIA) was the toast of the country's market today as the region's largest carrier by market value received a handy tailwind from a strong set of quarterly figures.

The lift, which took the shares up 40 cents, or 3.5%, to S$11.70, will help the company's management and its investors put the nasty Sars-tainted months behind it.

Like its peers, SIA was humbled by the health crisis, which rocked much of Asia in March and April. Stung by the travellers' stay-away, the State-linked company posted its first-ever loss of S$312 million (£106 million) in the June quarter.

For the just-completed quarter, SIA said after the market close yesterday that it had returned to the black, posting net profit of S$306 million. That was about three times the amount forecast by most analysts. SIA has been especially aggressive at hacking away at its cost base.

During the crisis many routes were pared, while the payroll was reduced.

Its efforts were rewarded today by broker upgrades. ING says it is looking for the stock to trade as high as S$14 a share, while Morgan Stanley was confident enough to boost its price target by S$1 to S$13.

Despite the generally positive news some dark clouds remain. It is unclear how the growth of low-cost rivals will affect SIA, especially its regional wing, SilkAir. SIA management has also signalled a desire to revamp cost structure in the long term, not simply as a knee-jerk response to short-term pressures.

The airline's betterthanexpected performance was not enough to push the wider market higher. The Straits Times index succumbed to profit-taking, yielding 0.55%, or 9.52 points, to 1712.77.

Blue-chip exporter Li & Fung was the principal casualty in Hong Kong. It slumped 75 cents, or 5.4%, to HK$13.20 after a major shareholder, mining giant Anglo American, offloaded its entire 4.6% stake.

Anglo American is in the process of getting rid of stakes that do not relate squarely to its core businesses. The Li & Fung shares were placed at between HK$13.15 and HK$13.25 apiece, pulling the rug from underneath the stock's standing. The Li & Fung drop helped undermine the Hang Seng index, which retreated 48.83 points to 12,081.7.

The decline would have been worse but for continued advances for banking giant HSBC, which has risen steadily on hopes of more-robust global growth. Today HSBC was up HK$1.50, or 1.3%, at HK$115.50, while subsidiary Hang Seng Bank edged towards HK$100, adding 25 cents, or 0.3%, at HK$98.50.

SIA rival Cathay Pacific Airways was stronger after the Singapore company's figures. Its shares climbed to HK$14.20, higher by five cents or 0.4%.

In Tokyo, currency jitters stifled any upside with the yen trading at three-year highs against the dollar.

With fears that the greenback may slip further, the Nikkei 225 closed 43.66 points down at 10,695.56.

Exporters weakened. Tyremaker Bridgestone lost 27 yen, or 1.9%, to 1368; Sony shed 60 yen, or 1.5%, to 3850; and carmaker Toyota traded at 3210, down 30 yen, or 0.9%.

Australian shares were a touch firmer following gains on Wall Street. The All Ordinaries index closed 0.30% or 9.9 points higher at 3284.6.